OIL & GAS PROPERTY TAX; MUNI TAX; AGDC

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SENATE CS FOR CS FOR HOUSE BILL NO. 381(FIN) am S

IN THE LEGISLATURE OF THE STATE OF ALASKA

THIRTY-FOURTH LEGISLATURE - SECOND SPECIAL SESSION

BY THE SENATE FINANCE COMMITTEE

Amended: 6/19/26
Offered: 6/19/26

Sponsor(s): HOUSE RULES COMMITTEE BY REQUEST OF THE GOVERNOR
A BILL

FOR AN ACT ENTITLED

"An Act relating to the taxation of certain natural gas project property and related 1
facilities; relating to local contributions for public school funding; relating to municipal 2
property taxes; relating to the Alaska Gasline Development Corporation and funds of 3
the Alaska Gasline Development Corporation; relating to reporting requirements for 4
natural gas pipeline projects; creating the Alaska affordable heating fuel fund; relating 5
to approval of contracts by the Regulatory Commission of Alaska and inflation 6
adjustment of the maximum price of natural gas; establishing an income tax on certain 7
entities producing or transporting oil or gas in the state; relating to an alternative 8
volumetric tax on natural gas throughput; relating to a municipal impact grant program 9
and fund; relating to agreements and a payment related to a natural gas project; and 10
providing for an effective date." 11
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 12
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* Section 1. The uncodified law of the State of Alaska is amended by adding a new section 1
to read: 2
LEGISLATIVE FINDINGS AND INTENT. (a) The legislature finds that the tax 3
treatment in sec. 30 of this Act is necessary to advance a major natural gas project and to 4
ensure that 5
(1) the project maximizes the benefit to the state by ensuring direct and 6
affordable access to natural gas to the residents of the state; and 7
(2) communities affected by the natural gas project are protected from the 8
negative effects of the project. 9
(b) The legislature finds that, given that the state is part owner of the natural gas 10
project, the project labor agreement, prevailing wage, and apprenticeship utilization 11
requirements in this Act are necessary to advance the project, avoid unnecessary interruptions, 12
and ensure efficient completion, predictable labor costs, a steady supply of skilled labor, high 13
quality training, coordination among multiple employers, and certainty about terms and 14
conditions of employment. 15
(c) Nothing in this Act is intended to establish, modify, impair, waive, or otherwise 16
affect the tax treatment, assessment methodology, valuation, taxing authority, or applicability 17
of taxes imposed under AS 29.45 or AS 43.56 with respect to any other property, project, 18
facility, infrastructure, or taxpayer. It is the intent of the legislature that this Act be narrowly 19
construed and not serve as precedent, guidance, or interpretive authority for the taxation of 20
any other property subject to taxation under AS 29.45 or AS 43.56. 21
* Sec. 2. AS 14.17.410(b), as amended by sec. 8, ch. 22, SLA 2026, is amended to read: 22
(b) Public school funding consists of state aid, a required local contribution, 23
and eligible federal impact aid determined as follows: 24
(1) state aid equals basic need minus a required local contribution and 25
90 percent of eligible federal impact aid for t hat fiscal year; basic need equals the sum 26
obtained under (D) of this paragraph, multiplied by the base student allocation set out 27
in AS 14.17.470; district adjusted ADM is calculated as follows: 28
(A) the ADM of each school in the district is calculated by 29
applying the school size factor to the student count as set out in AS 14.17.450; 30
(B) the number obtained under (A) of this paragraph is 31
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multiplied by the district cost factor described in AS 14.17.460; 1
(C) the ADMs of each school in a district, as adjusted 2
according to (A) and (B) of this paragraph, are added; the sum is then 3
multiplied by the special needs factor set out in AS 14.17.420(a)(1) and the 4
secondary school vocational and technical instruction funding factor set out in 5
AS 14.17.420(a)(3); 6
(D) the number obtained for intensive services under 7
AS 14.17.420(a)(2) and the number obtained for correspondence study under 8
AS 14.17.430 are added to the number obtained under (C) of this paragraph or 9
under (H) and (I) of this paragraph; 10
(E) notwithstanding (A) - (C) of this paragraph, if a school 11
district's ADM adjusted for school size under (A) of this paragraph decreases 12
by five percent or more from one fiscal year to the next fiscal year, the school 13
district may use the last fiscal year before the decrease as a base fiscal year to 14
offset the decrease, according to the following method: 15
(i) for the first fiscal year after the base fiscal year 16
determined under this subparagraph, the school district's ADM adjusted 17
for school size determined under (A) of this paragraph is calculated as 18
the district's ADM adjusted for school size, plus 75 percent of the 19
difference in the district's ADM adjusted for school size between the 20
base fiscal year and the first fiscal year after the base fiscal year; 21
(ii) for the second fiscal year after the base fiscal year 22
determined under this subparagraph, the school district's ADM adjusted 23
for school size determined under (A) of this paragraph is calculated as 24
the district's ADM adjusted for school size, plus 50 percent of the 25
difference in the district's ADM adjusted for school size between the 26
base fiscal year and the second fiscal year after the base fiscal year; 27
(iii) for the third fiscal year after the base fiscal year 28
determined under this subparagraph, the school district's ADM adjusted 29
for school size determined under (A) of this paragraph is calculated as 30
the district's ADM adjusted for school size, plus 25 percent of the 31
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difference in the district's ADM adjusted for school size between the 1
base fiscal year and the third fiscal year after the base fiscal year; 2
(F) the method established in (E) of this paragraph is available 3
to a school district for the three fiscal years following the base fiscal year 4
determined under (E) of this paragraph only if the district's ADM adjusted for 5
school size determined under (A) of this paragraph for each fiscal year is less 6
than the district's ADM adjusted for school size in the base fiscal year; 7
(G) the method established in (E) of this paragraph does not 8
apply to a decrease in the district's ADM adjusted for school size resulting 9
from a loss of enrollment that occurs as a result of a boundary change under 10
AS 29; 11
(H) notwithstanding (A) - (C) of this paragraph, if one or more 12
schools close and consolidate with one or more other schools in the same 13
community and district and, as a result of the consolidation, basic need 14
generated by the district's ADM of the consolidated schools as adjusted under 15
(A) - (C) of this paragraph decreases, the district may use the last fiscal year 16
before the consolidation as the base fiscal year to offset that decrease for the 17
first four fiscal years following consolidation according to the following 18
method: 19
(i) for the first two fiscal years after the base fiscal year, 20
the district's ADM of the consolidated schools as adjusted under (A) - 21
(C) of this paragraph is calculated by dividing the sum of the district's 22
ADM of the consolidated schools as adjusted under (A) - (C) of this 23
paragraph for the base fiscal year by the sum of the district's ADM of 24
the consolidated schools for the base fiscal year without adjustment, 25
and subtracting the quotient obtained by dividing the district's ADM of 26
the consolidated schools for the current fiscal year as adjusted under 27
(A) - (C) of this paragraph by the sum of the district's ADM of the 28
consolidated schools for the current fiscal year without adjustment, 29
multiplying that number by the sum of the district's ADM of the 30
consolidated schools for the current fiscal year without adjustment, and 31
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adding that number to the sum of the district's ADM of the consolidated 1
schools for the current fiscal year as adjusted under (A) - (C) of this 2
paragraph; 3
(ii) for the third fiscal year after the base fiscal year, the 4
district's ADM of the consolidated schools as adjusted under (A) - (C) 5
of this paragraph is calculated by dividing the sum of the district's 6
ADM of the consolidated schools as adjusted under (A) - (C) of this 7
paragraph for the base fiscal year by the sum of the district's ADM of 8
the consolidated schools for the base fiscal year without adjustment, 9
and subtracting the quotient obtained by dividing the sum of the 10
district's ADM of the consolidated schools for the current fiscal year as 11
adjusted under (A) - (C) of this paragraph by the sum of the district's 12
ADM of the consolidated schools for the current fiscal year, 13
multiplying that number by the sum of the district's ADM of the 14
consolidated schools for the current fiscal year without adjustment, 15
multiplying that number by 66 percent, and adding that number to the 16
sum of the district's ADM of the consolidated schools for the current 17
fiscal year as adjusted under (A) - (C) of this paragraph; 18
(iii) for the fourth fiscal year after the base fiscal year, 19
the district's ADM of the consolidated schools as adjusted under (A) - 20
(C) of this paragraph is calculated by dividing the sum of the district's 21
ADM of the consolidated schools as adjusted under (A) - (C) of this 22
paragraph for the base fiscal year by the sum of the district's ADM of 23
the consolidated schools for the base fiscal year without adjustment, 24
and subtracting the quotient obtained by dividing the sum of the 25
district's ADM of the consolidated schools for the current fiscal year as 26
adjusted under (A) - (C) of this paragraph by the sum of the district's 27
ADM of the consolidated schools for the current fiscal year, 28
multiplying that number by the sum of the district's ADM of the 29
consolidated schools for the current fiscal year without adjustment, 30
multiplying that number by 33 percent, and adding that number to the 31
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sum of the district's ADM of the consolidated schools for the current 1
fiscal year as adjusted under (A) - (C) of this paragraph; 2
(iv) to calculate the district's basic need for each fiscal 3
year, the number obtained through the calculation in (i), (ii), or (iii) of 4
this subparagraph is added to the number obtained under (C) of this 5
paragraph for the remainder of the district; 6
(I) if the basic need calculated under (H)(i) - (iii) of this 7
paragraph for one of the first four fiscal years after consolidation is less than 8
the basic need calculated under (A) - (C) of this paragraph for that fiscal year, 9
the basic need may not be adjusted under (H) of this paragraph for that fiscal 10
year; 11
(J) a district may not offset a decrease under (H) of this 12
paragraph if 13
(i) a new facility is constructed in the district for the 14
consolidation; or 15
(ii) the district offset a decrease under (E) of this 16
paragraph in the same fiscal year; 17
(K) a district that offsets a decrease under (H) of this paragraph 18
may not reopen a school that was closed for consolidation in the district until 19
(i) four or more years have passed since the school 20
closure; and 21
(ii) the district provides evidence satisfactory to the 22
department that the schools affected by the consolidation are over 23
capacity; 24
(L) a district may not reopen and reconsolidate a school that 25
was consolidated in the district more than once every four years for purposes 26
of the calculations made under (H) of this paragraph; 27
(M) a district offsetting a decrease under (H) of this paragraph 28
shall provide the department with the list of schools participating in the 29
consolidation and the corresponding ADM; 30
(2) the required local contribution of a city or borough school district 31
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(A) is calculated by combining 1
(i) the equivalent of a 2.65 mill tax levy on the full and 2
true value of the taxable real and personal property in the district as of 3
January 1 of the second preceding fiscal year, as determined by the 4
Department of Commerce, Community, and Economic Development 5
under AS 14.17.510 and AS 29.45.110, not to exceed the amount 6
calculated under this sub-subparagraph for the preceding fiscal 7
year by more than four percent; and 8
(ii) if the city or borough of the school district 9
collects an alternative volumetric tax under AS 43.59.030, or if the 10
state collects an alternative volumetric tax on behalf of the city or 11
borough of the school district under AS 43.59.030, an amount equal 12
to a portion of the alternative volumetric tax collected, calculated 13
by multiplying the alternative volumetric tax collected by or on 14
behalf of the city or borough under AS 43.59.030 by 2.65 and 15
dividing the product by the mill rate set out in AS 43.56.010(a); 16
(B) [; THE REQUIRED LOCAL CONTRIBUTION] may not 17
exceed [(A)] 45 percent of a district's basic need for 18
(i) the preceding fiscal year as determined under (1) of 19
this subsection; or 20
(ii) [(B) THE AMOUNT OF THE DISTRICT'S 21
REQUIRED LOCAL CONTRIBUTION FOR] the second preceding 22
fiscal year as determined under (1) of this subsection by more than 23
four percent. 24
* Sec. 3. AS 14.17.410(b), as amended by sec. 2 of this Act, is amended to read: 25
(b) Public school funding consists of state aid, a required local contribution, 26
and eligible federal impact aid determined as follows: 27
(1) state aid equals basic need minus a required local contribution and 28
90 percent of eligible federal impact aid for t hat fiscal year; basic need equals the sum 29
obtained under (D) of this paragraph, multiplied by the base student allocation set out 30
in AS 14.17.470; district adjusted ADM is calculated as follows: 31
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(A) the ADM of each school in the district is calculated by 1
applying the school size factor to the student count as set out in AS 14.17.450; 2
(B) the number obtained under (A) of this paragraph is 3
multiplied by the district cost factor described in AS 14.17.460; 4
(C) the ADMs of each school in a district, as adjusted 5
according to (A) and (B) of this paragraph, are added; the sum is then 6
multiplied by the special needs factor set out in AS 14.17.420(a)(1) and the 7
secondary school vocational and technical instruction funding factor set out in 8
AS 14.17.420(a)(3); 9
(D) the number obtained for intensive services under 10
AS 14.17.420(a)(2) and the number obtained for correspondence study under 11
AS 14.17.430 are added to the number obtained under (C) of this paragraph or 12
under (H) and (I) of this paragraph; 13
(E) notwithstanding (A) - (C) of this paragraph, if a school 14
district's ADM adjusted for school size under (A) of this paragraph decreases 15
by five percent or more from one fiscal year to the next fiscal year, the school 16
district may use the last fiscal year before the decrease as a base fiscal year to 17
offset the decrease, according to the following method: 18
(i) for the first fiscal year after the base fiscal year 19
determined under this subparagraph, the school district's ADM adjusted 20
for school size determined under (A) of this paragraph is calculated as 21
the district's ADM adjusted for school size, plus 75 percent of the 22
difference in the district's ADM adjusted for school size between the 23
base fiscal year and the first fiscal year after the base fiscal year; 24
(ii) for the second fiscal year after the base fiscal year 25
determined under this subparagraph, the school district's ADM adjusted 26
for school size determined under (A) of this paragraph is calculated as 27
the district's ADM adjusted for school size, plus 50 percent of the 28
difference in the district's ADM adjusted for school size between the 29
base fiscal year and the second fiscal year after the base fiscal year; 30
(iii) for the third fiscal year after the base fiscal year 31
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determined under this subparagraph, the school district's ADM adjusted 1
for school size determined under (A) of this paragraph is calculated as 2
the district's ADM adjusted for school size, plus 25 percent of the 3
difference in the district's ADM adjusted for school size between the 4
base fiscal year and the third fiscal year after the base fiscal year; 5
(F) the method established in (E) of this paragraph is available 6
to a school district for the three fiscal years following the base fiscal year 7
determined under (E) of this paragraph only if the district's ADM adjusted for 8
school size determined under (A) of this paragraph for each fiscal year is less 9
than the district's ADM adjusted for school size in the base fiscal year; 10
(G) the method established in (E) of this paragraph does not 11
apply to a decrease in the district's ADM adjusted for school size resulting 12
from a loss of enrollment that occurs as a result of a boundary change under 13
AS 29; 14
(H) notwithstanding (A) - (C) of this paragraph, if one or more 15
schools close and consolidate with one or more other schools in the same 16
community and district and, as a result of the consolidation, basic need 17
generated by the district's ADM of the consolidated schools as adjusted under 18
(A) - (C) of this paragraph decreases, the district may use the last fiscal year 19
before the consolidation as the base fiscal year to offset that decrease for the 20
first four fiscal years following consolidation according to the following 21
method: 22
(i) for the first two fiscal years after the base fiscal year, 23
the district's ADM of the consolidated schools as adjusted under (A) - 24
(C) of this paragraph is calculated by dividing the sum of the district's 25
ADM of the consolidated schools as adjusted under (A) - (C) of this 26
paragraph for the base fiscal year by the sum of the district's ADM of 27
the consolidated schools for the base fiscal year without adjustment, 28
and subtracting the quotient obtained by dividing the district's ADM of 29
the consolidated schools for the current fiscal year as adjusted under 30
(A) - (C) of this paragraph by the sum of the district's ADM of the 31
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consolidated schools for the current fiscal year without adjustment, 1
multiplying that number by the sum of the district's ADM of the 2
consolidated schools for the current fiscal year without adjustment, and 3
adding that number to the sum of the district's ADM of the consolidated 4
schools for the current fiscal year as adjusted under (A) - (C) of this 5
paragraph; 6
(ii) for the third fiscal year after the base fiscal year, the 7
district's ADM of the consolidated schools as adjusted under (A) - (C) 8
of this paragraph is calculated by dividing the sum of the district's 9
ADM of the consolidated schools as adjusted under (A) - (C) of this 10
paragraph for the base fiscal year by the sum of the district's ADM of 11
the consolidated schools for the base fiscal year without adjustment, 12
and subtracting the quotient obtained by dividing the sum of the 13
district's ADM of the consolidated schools for the current fiscal year as 14
adjusted under (A) - (C) of this paragraph by the sum of the district's 15
ADM of the consolidated schools for the current fiscal year, 16
multiplying that number by the sum of the district's ADM of the 17
consolidated schools for the current fiscal year without adjustment, 18
multiplying that number by 66 percent, and adding that number to the 19
sum of the district's ADM of the consolidated schools for the current 20
fiscal year as adjusted under (A) - (C) of this paragraph; 21
(iii) for the fourth fiscal year after the base fiscal year, 22
the district's ADM of the consolidated schools as adjusted under (A) - 23
(C) of this paragraph is calculated by dividing the sum of the district's 24
ADM of the consolidated schools as adjusted under (A) - (C) of this 25
paragraph for the base fiscal year by the sum of the district's ADM of 26
the consolidated schools for the base fiscal year without adjustment, 27
and subtracting the quotient obtained by dividing the sum of the 28
district's ADM of the consolidated schools for the current fiscal year as 29
adjusted under (A) - (C) of this paragraph by the sum of the district's 30
ADM of the consolidated schools for the current fiscal year, 31
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multiplying that number by the sum of the district's ADM of the 1
consolidated schools for the current fiscal year without adjustment, 2
multiplying that number by 33 percent, and adding that number to the 3
sum of the district's ADM of the consolidated schools for the current 4
fiscal year as adjusted under (A) - (C) of this paragraph; 5
(iv) to calculate the district's basic need for each fiscal 6
year, the number obtained through the calculation in (i), (ii), or (iii) of 7
this subparagraph is added to the number obtained under (C) of this 8
paragraph for the remainder of the district; 9
(I) if the basic need calculated under (H)(i) - (iii) of this 10
paragraph for one of the first four fiscal years after consolidation is less than 11
the basic need calculated under (A) - (C) of this paragraph for that fiscal year, 12
the basic need may not be adjusted under (H) of this paragraph for that fiscal 13
year; 14
(J) a district may not offset a decrease under (H) of this 15
paragraph if 16
(i) a new facility is constructed in the district for the 17
consolidation; or 18
(ii) the district offset a decrease under (E) of this 19
paragraph in the same fiscal year; 20
(K) a district that offsets a decrease under (H) of this paragraph 21
may not reopen a school that was closed for consolidation in the district until 22
(i) four or more years have passed since the school 23
closure; and 24
(ii) the district provides evidence satisfactory to the 25
department that the schools affected by the consolidation are over 26
capacity; 27
(L) a district may not reopen and reconsolidate a school that 28
was consolidated in the district more than once every four years for purposes 29
of the calculations made under (H) of this paragraph; 30
(M) a district offsetting a decrease under (H) of this paragraph 31
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shall provide the department with the list of schools participating in the 1
consolidation and the corresponding ADM; 2
(2) the required local contribution of a city or borough school district 3
[(A)] is [CALCULATED BY COMBINING 4
(i)] the equivalent of a 2.65 mill tax levy on the full and 5
true value of the taxable real and personal property in the district as of 6
January 1 of the second preceding fiscal year, as determined by the 7
Department of Commerce, Community, and Economic Development 8
under AS 14.17.510 and AS 29.45.110; the required local 9
contribution [, NOT TO EXCEED THE AMOUNT CALCULATED 10
UNDER THIS SUB -SUBPARAGRAPH FOR THE PRECEDING 11
FISCAL YEAR BY MORE THAN FOUR PERCENT; AND 12
(ii) IF THE CITY OR BOROUGH OF THE SCHOOL 13
DISTRICT COLLECTS AN ALTERNATIVE VOLUMETRIC TAX 14
UNDER AS 43.59.030, OR IF THE STATE COLLECTS AN 15
ALTERNATIVE VOLUMETRIC TAX ON BEHALF OF THE CITY 16
OR BOROUGH OF THE SCHOOL DISTRICT UNDER 17
AS 43.59.030, AN AMOUNT EQUAL TO A PORTION OF THE 18
ALTERNATIVE VOLUMETRIC TAX COLLECTED, 19
CALCULATED BY MULTIPLYING THE ALTERNATIVE 20
VOLUMETRIC TAX COLLECTED BY OR ON BEHALF OF THE 21
CITY OR BOROUGH UNDER AS 43.59.030 BY 2.65 AND 22
DIVIDING THE PRODUCT BY THE MILL RATE SET OUT IN 23
AS 43.56.010(a); 24
(B)] may not exceed 25
(A) 45 percent of a district's basic need for 26
[(i)] the preceding fiscal year as determined under (1) of 27
this subsection; or 28
(B) the amount of the district's required local contribution 29
for 30
[(ii)] the [SECOND] preceding fiscal year [AS 31
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DETERMINED UNDER (1) OF THIS SUBSECTION ] by more than 1
four percent. 2
* Sec. 4. AS 14.17.510 is amended by adding a new subsection to read: 3
(d) In this section, the full and true value of the taxable real and personal 4
property does not include property subject to tax abatement under AS 43.59.010 or the 5
alternative volumetric tax levied under AS 43.59.020. 6
* Sec. 5. AS 29.45.030 is amended by adding a new subsection to read: 7
(o) Property of a natural gas project subject to tax abatement under 8
AS 43.59.010 or to the alternative volumetric tax under AS 43.59.020 is exempt from 9
taxation under AS 29.45. In this subsection, "natural gas project" has the meaning 10
given in AS 43.59.100. 11
* Sec. 6. AS 29.45.080(c) is amended to read: 12
(c) A municipality may levy and collect a tax on the full and true value of that 13
portion of taxable property taxable under AS 43.56 as assessed by the Department of 14
Revenue which value, when combined with the value of property otherwise taxable by 15
the municipality, does not exceed the product of the percentage determined in (f) of 16
this section of the average per capita assessed full and true value of property in the 17
state multiplied by the number of residents of the taxing municipality. Property 18
subject to tax abatement under AS 43.59.010 or to the alternative volumetric tax 19
levied under AS 43.59.020 is not included in the value of property for the purpose 20
of making the calculation under this subsection. 21
* Sec. 7. AS 31.25.010 is amended to read: 22
Sec. 31.25.010. Structure. The Alaska Gasline Development Corporation is a 23
public corporation and government instrumentality acting in the best interest and as a 24
fiduciary of the state for the purposes required by AS 31.25.005, located for 25
administrative purposes in the Department of Commerce, Community, and Economic 26
Development, but having a legal existence independent of and separate from the state. 27
The corporation may not be terminated as long as it has bonds, notes, or other 28
obligations outstanding. The corporation may dissolve when no bonds, notes, or other 29
obligations of the corporation or a subsidiary of the corporation are outstanding and 30
the corporation or a subsidiary of the corporation is no longer engaged in the 31
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development, financing, construction, or operation of an in-state natural gas pipeline 1
or an Alaska liquefied natural gas project. Upon termination of the corporation, its 2
rights and property pass to the state. 3
* Sec. 8. AS 31.25.040(b) is amended to read: 4
(b) The board shall by regulation adopted under AS 44.62 (Administrative 5
Procedure Act) adopt and publish procedures to govern the procurement by the 6
corporation of supplies, services, professional services, and construction. The 7
procurement procedures must 8
(1) reflect competitive bidding principles and provide vendors 9
reasonable and equitable opportunities to participate in the procurement 10
process; 11
(2) include procurement methods to meet emergency and 12
extraordinary circumstances; 13
(3) comply with the five percent preference under AS 36.30.321(a); 14
and 15
(4) provide for an Alaska veterans' preference that is consistent with 16
the Alaska veterans' preference in AS 36.30.175. 17
* Sec. 9. AS 31.25.080(a) is amended to read: 18
(a) In addition to other powers granted in this chapter, the corporation may 19
(1) determine the form of ownership and the operating structure of an 20
in-state natural gas pipeline developed by the corporation and may, subject to 21
AS 31.25.120(b), enter into agreements with other persons for joint ownership, joint 22
operation, or both of an in-state natural gas pipeline or an Alaska liquefied natural gas 23
project; 24
(2) plan, finance, construct, develop, acquire, maintain, and operate a 25
pipeline system and other transportation mechanism, including pipelines, compressors, 26
storage facilities, and other related facilities, equipment, and works of public 27
improvement, in the state to facilitate production, transportation, and delivery of 28
natural gas or other related natural resources to the point of consumption or to the 29
point of distribution for consumption; 30
(3) lease or rent facilities, structures, and properties; 31
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(4) exercise the power of eminent domain and file a declaration of 1
taking under AS 09.55.240 - 09.55.460 to acquire land or an interest in land that is 2
necessary for an in-state natural gas pipeline or an Alaska liquefied natural gas project; 3
the exercise of powers by the corporation under this paragraph may not exceed the 4
permissible exercise of the powers by the state; 5
(5) acquire, by purchase, lease, or gift, land, structures, real or personal 6
property, an interest in property, a right-of-way, a franchise, an easement, or other 7
interest in land, or an interest in or right to capacity in a pipeline system determined to 8
be necessary or convenient for the development, financing, construction, or operation 9
of an in-state natural gas pipeline project or an Alaska liquefied natural gas project or 10
part of an in-state natural gas pipeline project or an Alaska liquefied natural gas 11
project; 12
(6) subject to AS 31.25.120(b), transfer or otherwise dispose of all or 13
part of an in-state natural gas pipeline project, an Alaska liquefied natural gas project, 14
or an interest in an asset of the corporation; 15
(7) elect to provide transportation of natural gas as a contract carrier, 16
common carrier, or otherwise; 17
(8) provide light, water, security, and other services for property of the 18
corporation; 19
(9) conduct hearings to gather and develop data consistent with the 20
purpose and powers of the corporation; 21
(10) advocate for new pipeline capacity before the Federal Energy 22
Regulatory Commission; 23
(11) make and execute agreements, contracts, and other instruments 24
necessary or convenient in the exercise of the powers and functions of the corporation 25
under this chapter, including a contract with a person, firm, corporation, governmental 26
agency, or other entity; 27
(12) sue and be sued in its own name; 28
(13) adopt an official seal; 29
(14) adopt bylaws for the regulation of its affairs and the conduct of its 30
business and adopt regulations and policies in connection with the performance of its 31
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functions and duties; 1
(15) employ fiscal consultants, engineers, attorneys, appraisers, and 2
other consultants and employees that may, in the judgment of the corporation, be 3
required and fix and pay their compensation from funds available to the corporation; 4
(16) procure insurance against a loss in connection with its operation; 5
(17) borrow money as provided in this chapter to carry out its 6
corporate purposes and issue its obligations as evidence of borrowing; 7
(18) include in a borrowing the amounts necessary to pay financing 8
charges, to pay interest on the obligations, and to pay the interest, consultant, advisory, 9
and legal fees, and other expenses that are necessary or incident to the borrowing; 10
(19) receive, administer, and comply with the conditions and 11
requirements of an appropriation, gift, grant, or donation of property or money; 12
(20) do all acts and things necessary, convenient, or desirable to carry 13
out the powers expressly granted or necessarily implied in this chapter; 14
(21) invest or reinvest, subject to its contracts with noteholders and 15
bondholders, money or funds held by the corporation, including funds in the [IN-16
STATE NATURAL GAS PIPELINE FUND (AS 31.25.100) AND THE] Alaska 17
liquefied natural gas project bond fund (AS 31.25.150 [AS 31.25.110]), in obligations 18
or other securities or investments in which banks or trust companies in the state may 19
legally invest funds held in reserves or sinking funds or funds not required for 20
immediate disbursement, and in certificates of deposit or time deposits secured by 21
obligations of, or guaranteed by, the state or the United States; 22
(22) enter into, as it determines to be necessary or appropriate, any 23
swap or hedge, cap, or other contract providing for payments based on levels of or 24
changes in interest rates or indices or in the cost or price of any commodity, supply, or 25
expense expected to be used or incurred in connection with the acquisition, 26
construction, or operation of any facility or property owned, leased, or operated by the 27
corporation, or an option with respect to any of the foregoing; 28
(23) except as provided in (g) of this section, acquire an ownership or 29
participation interest in an Alaska liquefied natural gas project, natural gas treatment 30
facilities, natural gas pipeline facilities, liquefaction facilities, marine terminal 31
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facilities related to the infrastructure of an Alaska liquefied natural gas project, or an 1
entity or joint venture that has an ownership interest in or is engaged in the planning, 2
financing, acquisition, maintenance, construction, and operation of an Alaska liquefied 3
natural gas project; 4
(24) after consultation with the commissioner of revenue and the 5
commissioner of natural resources, enter into contracts relating to an Alaska liquefied 6
natural gas project, including contracts for services related to operation, marketing, 7
transportation, gas treatment, marine terminal operation, or liquefaction. 8
* Sec. 10. AS 31.25.080 is amended by adding a new subsection to read: 9
(h) The corporation shall, to the maximum extent possible, use contractors and 10
suppliers in the state in order to benefit from the experience of workers and businesses 11
in the state in arctic engineering and construction. 12
* Sec. 11. AS 31.25.090(f) is amended to read: 13
(f) Subject to the restrictions in this section, the [THE] corporation may 14
enter into confidentiality agreements necessary to acquire or provide information to 15
carry out its functions. If a state agency determines that a law or provision of a 16
contract to which the state agency is a party requires the state agency to preserve the 17
confidentiality of the information and that delivering the information to the 18
corporation would violate the confidentiality provision of that law or contract, the state 19
agency shall 20
(1) identify the applicable law or contract provision to the corporation; 21
and 22
(2) obtain the consent of the person who has the right to waive the 23
confidentiality of the information under the applicable law or contract provision before 24
the state agency transfers the information to the corporation. 25
* Sec. 12. AS 31.25.090 is amended by adding new subsections to read: 26
(j) A confidentiality agreement entered into under (f) of this section may not 27
(1) prevent compliance with an administrative or court order 28
mandating disclosure; 29
(2) make confidential contract terms, or prospective contract terms, 30
that could extend to or encumber the state with fiscal or performance liability, 31
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obligation, or risk, either directly or indirectly; 1
(3) except as provided in (k) of this section, make confidential 2
information that may lead to 3
(A) a significant fiscal liability, obligation, or risk to the state; 4
or 5
(B) appropriations or other state funding or in-kind payments 6
or services from the state; 7
(4) make confidential the ownership or management structure of a 8
subsidiary of the corporation; 9
(5) make confidential information related to the existence of a state 10
interest option under AS 31.25.125; or 11
(6) on and after the date the corporation delivers notification of an 12
exercisable option under AS 31.25.125(d), make confidential information related to a 13
revenue-generating project 14
(A) that is provided to other investors in the revenue-generating 15
project; or 16
(B) to which a prudent investor would expect to have access 17
before making an investment decision. 18
(k) A confidentiality agreement entered into under (f) of this section may 19
make confidential specific known or reasonably anticipated project economics or costs 20
related to the Alaska liquefied natural gas project only if 21
(1) one or more parties to the agreement reasonably assert that release 22
of the project economics or costs would cause commercial or competitive harm to an 23
entity involved in the Alaska liquefied natural gas project; and 24
(2) the parties to the contract agree to release reasonable estimated 25
ranges or a summarization of project economics and costs sufficient for a legislator or 26
a public agent to assess the fiscal liability, obligation, or risk to the state, to the extent 27
that the ranges or summarization does not cause commercial or competitive harm to an 28
entity involved in the Alaska liquefied natural gas project. 29
(l) In this section, 30
(1) "public agent" means 31
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(A) a public agency, as defined in AS 40.25.220, or an agent or 1
contractor of a public agency; 2
(B) an agent or contractor of a member of the legislature or of a 3
legislative committee; 4
(2) "revenue-generating project" has the meaning given in 5
AS 31.25.125(i). 6
* Sec. 13. AS 31.25.120 is amended to read: 7
Sec. 31.25.120. Creation of subsidiaries. The corporation may create 8
subsidiary corporations for the purpose of developing, constructing, operating, and 9
financing in-state natural gas pipeline projects or other transportation mechanisms; for 10
the purpose of aiding in the development, construction, operation, and financing of in-11
state natural gas pipeline projects; or for the purpose of acquiring natural gas from the 12
North Slope, and natural gas from other regions of the state, including the state's outer 13
continental shelf, and making that natural gas available to markets in the state, 14
including the delivery of natural gas, including propane and other hydrocarbons 15
associated with natural gas other than oil, to coastal communities in the state, or for 16
export. Subject to the limitations for the use of money appropriated to [THE IN-17
STATE NATURAL GAS PIPELINE FUND (AS 31.25.100) AND] the Alaska 18
liquefied natural gas project bond fund (AS 31.25.150 [AS 31.25.110]), the 19
corporation may transfer assets of the corporation to a subsidiary created under this 20
section. A subsidiary created under this section may borrow money and issue bonds as 21
evidence of that borrowing and has all the powers of the corporation that the 22
corporation grants to it. Unless otherwise provided by the corporation, the debts, 23
liabilities, and obligations of a subsidiary corporation created under this section are not 24
the debts, liabilities, or obligations of the corporation. 25
* Sec. 14. AS 31.25.120 is amended by adding a new subsection to read: 26
(b) The corporation may transfer, sell, or otherwise dispose of an ownership or 27
management interest in a subsidiary of the corporation only after the legislature has 28
had the opportunity to disapprove the issuance of the transfer, sale, or disposition. 29
Legislative disapproval under this subsection must be by law. The corporation shall 30
notify the presiding officer of each house if the corporation intends to transfer, sell, or 31
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otherwise dispose of an ownership or management interest in a subsidiary of the 1
corporation. The legislature shall have 90 days to consider the transfer, sale, or 2
disposition. If the legislature does not disapprove the transfer, sale, or disposition of an 3
ownership interest within 90 days, the corporation may move forward with the 4
transfer, sale, or disposition. 5
* Sec. 15. AS 31.25 is amended by adding a new section to read: 6
Sec. 31.25.125. Involvement in revenue-generating projects. (a) If the 7
corporation negotiates with another entity for participation by the corporation in a 8
revenue-generating project, the corporation shall negotiate an option for the state or, 9
subject to (h) of this section, a municipality to acquire an interest in the project. The 10
corporation shall immediately notify the president of the senate, the speaker of the 11
house of representatives, and the chairs of the finance committee of each house of the 12
legislature on each occasion that an option for the state is available for consideration 13
by the legislature under (b)(1) of this section. 14
(b) An option exercisable under this section 15
(1) by the state must, before being exercised, be approved by the 16
legislature by law; and 17
(2) must allow the state or a municipality at least 180 days to exercise 18
the option after notification of the legislature under (d) of this section. 19
(c) At the request of the legislature, a state agency shall cooperate with and 20
assist the legislature in determining whether to approve under (b)(1) of this section the 21
terms of an option for the state negotiated under (a) of this section. 22
(d) The corporation shall immediately notify the president of the senate, the 23
speaker of the house of representatives, and the chairs of the finance committee of 24
each house of the legislature on each occasion that the state may exercise an option 25
negotiated under (a) of this section. 26
(e) The state may not acquire an interest in a revenue-generating project under 27
this section unless the interest is approved by the legislature by law. When making an 28
investment decision under this section, the legislature shall act as a prudent investor. 29
(f) The Department of Revenue shall cooperate with and assist the legislature 30
in determining whether to acquire an interest in a revenue-generating project under (e) 31
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of this section by exercising an option negotiated under (a) of this section, including 1
by identifying potential funding sources for exercising the option and potential fiscal 2
effects on the state. If requested by the legislature, another state agency shall cooperate 3
with and assist the legislature with making a determination under (e) of this section. 4
(g) The corporation, and any other entity participating in a revenue-generating 5
project, shall 6
(1) cooperate with and assist the legislature in determining whether to 7
approve the terms of an option negotiated under (a) of this section or to acquire an 8
interest in the project by exercising an option negotiated under this section; 9
(2) provide information requested by the legislature related to the 10
project, including 11
(A) information necessary for the legislature to act as a prudent 12
investor; and 13
(B) financial records of or related to the revenue-generating 14
project; and 15
(3) ensure that at least one representative of the corporation and of 16
each participating entity are available to testify during public hearings of legislative 17
committees requesting testimony. 18
(h) If the corporation negotiates with another entity for participation by the 19
corporation in a revenue-generating project under (a) of this section, the corporation 20
shall provide an opportunity for municipalities in the state to purchase a portion of the 21
corporation's right to acquire additional equity interest in the natural gas project not 22
exercised by the corporation, through an entity managed by the corporation. A 23
municipality may not acquire a direct interest in a revenue-generating project under 24
this subsection. 25
(i) In this section, 26
(1) "corporation" includes a subsidiary of the corporation; 27
(2) "revenue-generating project" means a project, entity ownership, 28
legal business arrangement, partnership, joint venture, or other commercial endeavor 29
expected to generate revenue. 30
* Sec. 16. AS 31.25.130(a) is amended to read: 31
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(a) Except as otherwise provided in this chapter and except for 1
AS 44.62.310 - 44.62.319 (Open Meetings Act), AS 44.62 (Administrative Procedure 2
Act) does not apply to this chapter. The corporation shall make available to members 3
of the public copies of the regulations adopted under (b) - (e) of this section. 4
* Sec. 17. AS 31.25.140(c) is amended to read: 5
(c) To further ensure effective budgetary decision making by the legislature, 6
the board shall 7
(1) annually review the corporation's assets, including the assets of 8
[THE IN-STATE NATURAL GAS PIPELINE FUND UNDER AS 31.25.100 AND] 9
the Alaska liquefied natural gas project bond fund under AS 31.25.150 10
[AS 31.25.110], to determine whether assets of the corporation exceed an amount 11
required to fulfill the purposes of the corporation as defined in this chapter; in making 12
its review, the board shall determine whether, and to what extent, assets in excess of 13
the amount required to fulfill the purposes of the corporation during the next fiscal 14
year are available without 15
(A) breaching an agreement entered into by the corporation; 16
(B) materially impairing the operations or financial integrity of 17
the corporation; or 18
(C) materially affecting the ability of the corporation to fulfill 19
the purposes of the corporation as defined in this chapter; 20
(2) specifically identify in the corporation's assets the amounts that the 21
board believes are necessary to meet the requirements of (1)(C) of this subsection; and 22
(3) present to the legislature by January 10 of each year a complete 23
accounting of all assets of the corporation, including assets of [THE IN-STATE 24
NATURAL GAS PIPELINE FUND UNDER AS 31.25.100 AND] the Alaska 25
liquefied natural gas project bond fund under AS 31.25.150 [AS 31.25.110], and a 26
report of the review and determination made under (1) and (2) of this subsection; the 27
accounting shall be audited by an independent outside auditor. 28
* Sec. 18. AS 31.25 is amended by adding new sections to article 1 to read: 29
Sec. 31.25.145. Accounting. (a) The corporation shall deposit into separate 30
accounts in the general fund revenue 31
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(1) generated by a subsidiary of the corporation; and 1
(2) resulting from an option negotiated under AS 31.25.125. 2
(b) The legislature may appropriate the annual estimated amount necessary for 3
the payment of obligations associated with bonds issued by the corporation to the 4
Alaska liquefied natural gas project bond fund (AS 31.25.150). 5
Sec. 31.25.150. Alaska liquefied natural gas project bond fund. The Alaska 6
liquefied natural gas project bond fund is established in the corporation and consists of 7
money appropriated to the fund. The corporation shall determine fund management 8
and may contract with the Department of Revenue for fund management. The 9
corporation may use money in the fund without further appropriation for the purpose 10
of paying obligations associated with bonds issued by the corporation. 11
Sec. 31.25.155. Prohibition on seeking recourse for failure or 12
abandonment of the project. An entity in a legal relationship with the corporation 13
that is acting as a lead party for development of an Alaska liquefied natural gas project 14
may not seek financial recourse or a claim for monetary reimbursement from the 15
corporation or the state based on the failure or abandonment of the project by the 16
entity. If, within a reasonable time frame, the entity acting as a lead party fails to 17
continue diligent development efforts or fails to meet a key milestone, including an 18
agreed-on clawback milestone or production of a front-end engineering design work 19
product related to a subproject, or fails to make a final investment decision on a 20
subproject, the ownership shares of the partnership or applicable subproject of the 21
entity acting as the lead party shall, within six months of the failed action or 22
abandonment of the Alaska liquefied natural gas project, revert or be transferred to the 23
corporation or another department or instrumentality of the state at no cost to the 24
corporation or the state. The corporation or the state may not be required by contract 25
to purchase the interest of an entity acting as a lead party in a subproject that fails to 26
reach a final investment decision. In this section, "subproject" means a natural gas 27
pipeline, gas treatment plant, or Alaska liquefied natural gas project facility. 28
* Sec. 19. AS 31.25.160 is amended by adding a new subsection to read: 29
(g) The corporation shall immediately notify the president of the senate, the 30
speaker of the house of representatives, and the chairs of the finance committee of 31
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each house of the legislature on each occasion on which the corporation intends to 1
issue bonds. The corporation, or a subsidiary of the corporation, may issue bonds only 2
after the legislature approves the issuance of the bonds by law. The legislature shall 3
have 90 days after the notification under this subsection to approve the issuance of the 4
bonds. If the legislature does not approve the issuance of the bonds within 90 days, the 5
corporation may not issue the bonds. The limitation in this subsection does not apply 6
to refunding bonds. Refunding bonds may be issued without further approval by the 7
legislature in a principal amount sufficient to provide funds for the payment of all 8
bonds to be refunded by the refunding bonds and, in addition, for the payment of all 9
other amounts that the corporation considers appropriate in connection with the 10
refunding, including expenses incident to the redeeming, calling, retiring, or paying of 11
the outstanding bonds, the funding of reserves, and the issuance of the refunding 12
bonds. 13
* Sec. 20. AS 31.25.270 is amended by adding new subsections to read: 14
(d) By February 15 and August 15 of each year, the board shall deliver a 15
report on natural gas pipeline projects in the state to the commissioner of revenue, 16
notify the governor and the legislature that the report is available, and publish notice to 17
the public on the Alaska Online Public Notice System under AS 44.62.175 that the 18
report is available on the corporation's Internet website. The board shall prepare the 19
report regardless of whether the corporation owns or operates the projects. The report 20
must 21
(1) provide a current status of natural gas projects in the state, 22
including construction status, projected timeline for completion, and a 23
description of any remaining phases of construction; 24
(2) provide a qualitative assessment and update of the timeline, budget, 25
and cost containment progress since the last report; 26
(3) provide an assessment of the effect of the projects on the state labor 27
market, including 28
(A) the number of jobs created or affected, listed by region of 29
the state; 30
(B) the total estimated payroll dollars attributable to the 31
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projects since the last report; and 1
(C) the proportion of resident and nonresident employees or 2
contractors working on the projects; 3
(4) set out secured intake and offtake contracts, by annual volume; and 4
(5) provide total capital expenditures for each major component of the 5
projects; an entity invested in a project with the corporation shall provide to the 6
corporation the information necessary to meet the requirements of this paragraph; in 7
this paragraph, "capital expenditure" means a cost that is properly chargeable to a 8
capital account under federal income tax principals, as determined at the time the 9
property is paid for. 10
(e) The corporation shall maintain on the corporation's Internet website a 11
publicly accessible dashboard for project accountability for each natural gas pipeline 12
project. The dashboard must 13
(1) show the status of each major phase of the project, including front-14
end and preliminary front-end engineering design, permits, financing, final investment 15
decision, notice to proceed, procurement, construction, startup, commercial 16
operations, phase two final investment decision, expansion, and decommissioning 17
planning; 18
(2) if the state exercises an option to invest in the natural gas pipeline 19
project, include the public cost estimate range, estimate class if available, schedule 20
baseline, current forecast, and summary explanation of material changes or variances; 21
(3) include a material risk register and mitigation status; 22
(4) provide the status of permitting and rights-of-way; 23
(5) include information on 24
(A) gas supply and offtake status by aggregate annual volume; 25
and 26
(B) in-state gas delivery and ratepayer protection status; 27
(6) include the status of the spur line, as defined in AS 42.05.438; 28
(7) include the status of community impact grants and mitigation; 29
(8) provide information regarding the number and proportion of state 30
resident hires and resident contractor or supplier participation; 31
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(9) be updated at least monthly before commencement of commercial 1
operations of the natural gas pipeline project and at least quarterly thereafter; and 2
(10) be updated within 10 business days after the corporation becomes 3
aware of a material change affecting cost, schedule, financing, permitting, in-state gas 4
delivery, ratepayer protection, community impacts, state fiscal exposure, or other 5
public-interest issue affecting the natural gas pipeline project. 6
(f) The corporation may use reasonable redactions, estimated ranges, 7
summaries, or status indicators to protect confidential or commercially sensitive 8
information on the dashboard required by (e) of this section. 9
(g) The corporation shall preserve dashboard updates made under (e) of this 10
section in a public archive on the corporation's Internet website, with date-stamped 11
changes and version history. 12
(h) A project developer shall provide to the corporation the information 13
required for the dashboard under (e) of this section. In this subsection, "project 14
developer" means an entity responsible for coordinating the financing and construction 15
of a natural gas pipeline project. 16
(i) In this section, 17
(1) "natural gas pipeline project" includes the Alaska liquefied natural 18
gas project or a similar project; 19
(2) "major component of the project" means a natural gas treatment 20
facility, carbon capture or underground storage facility, liquefaction facility, import or 21
export facility, or any other major facility associated with a natural gas pipeline 22
project. 23
* Sec. 21. AS 31.25 is amended by adding new sections to read: 24
Sec. 31.25.280. Relationships with foreign entities. (a) The corporation shall 25
promptly provide written notice to the president of the senate, the speaker of the house 26
of representatives, and the chairs of the finance committee of each house of the 27
legislature if the corporation, or a subsidiary of the corporation, enters into a legal 28
relationship with a foreign entity, either directly or indirectly through another person 29
or entity. The notification under this section must 30
(1) be provided at least quarterly on the calendar year; 31
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(2) include 1
(A) the full legal name of the foreign entity; 2
(B) a description of the legal relationship and any project 3
related to the legal relationship; 4
(C) the name of at least one individual authorized to bind the 5
foreign entity on matters related to the legal relationship; 6
(D) the physical address of the primary business operations of 7
the foreign entity; and 8
(E) the date the legal relationship was entered into. 9
(b) In addition to providing notification under (a) of this section, the 10
corporation shall ensure that an agent of the corporation or a subsidiary of the 11
corporation, if requested, is available to testify relating to the legal relationship during 12
one or more public hearings of legislative committees requesting testimony. 13
(c) In this section, 14
(1) "legal relationship" means a partnership, joint venture, joint 15
ownership agreement, merger, or other legal agreement made for the purpose of 16
investing in, obtaining monetary returns from, or obtaining an ownership interest in 17
(A) a project developed by the corporation or a subsidiary of 18
the corporation; 19
(B) a project in which the corporation or a subsidiary of the 20
corporation has an ownership or management interest; or 21
(C) an entity engaged in a project described in (A) or (B) of 22
this paragraph; 23
(2) "subsidiary of the corporation" includes, notwithstanding the 24
definition given in AS 31.25.390, a subsidiary that is partially owned by the 25
corporation, even if the subsidiary is not controlled by the corporation. 26
Sec. 31.25.285. Legislative notification of ownership change. (a) The 27
corporation shall promptly notify the president of the senate, the speaker of the house 28
of representatives, and the chairs of the finance committee of each house of the 29
legislature if 30
(1) the corporation becomes aware that an entity in a legal relationship 31
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with the corporation, or a subsidiary of the corporation, plans to make a significant 1
change in ownership structure; or 2
(2) an entity in a legal relationship with the corporation, or a subsidiary 3
of the corporation, has a significant change in ownership structure. 4
(b) In this section, "legal relationship" means a partnership, joint venture, joint 5
ownership agreement, or other legally binding business arrangement 6
(1) of which the corporation, or a subsidiary of the corporation, has at 7
least a 10 percent interest; or 8
(2) that has an interest in a third entity in which the corporation, or a 9
subsidiary of the corporation, also has at least a 10 percent interest; and 10
(3) that formed for the purpose of shared ownership or shared 11
management of, or pooling of resources for, an entity in which the corporation, or a 12
subsidiary of the corporation, has an ownership or management interest. 13
* Sec. 22. AS 31.25.390 is amended by adding a new paragraph to read: 14
(8) "subsidiary of the corporation" means a subsidiary controlled by 15
the corporation. 16
* Sec. 23. AS 37.05 is amended by adding a new section to article 6 to read: 17
Sec. 37.05.615. Alaska affordable heating fuel fund. (a) The Alaska 18
affordable heating fuel fund is created as a separate fund in the state treasury. The 19
fund consists of the amount determined and deposited in the fund under (b) of this 20
section and interest earned on the fund balance. 21
(b) The amount to be deposited in (a) of this section is 20 percent of the 22
revenue received from the state's royalty gas transported in an Alaska liquefied natural 23
gas project that remains after the payment to the Alaska permanent fund under 24
AS 37.13.010. The deposit made under this section may not interfere with the deposit 25
to the Alaska affordable energy fund (AS 37.05.610) or the contribution to the public 26
school trust fund (AS 37.14.150). 27
(c) The legislature may make appropriations from the Alaska affordable 28
heating fuel fund to fund programs that will reduce the cost of heating fuel in areas of 29
the state that are not expected to have or do not have direct access to a North Slope 30
natural gas pipeline. 31
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(d) Nothing in this section creates a dedicated fund. 1
(e) In this section, 2
(1) "Alaska liquefied natural gas project" has the meaning given in 3
AS 31.25.390; 4
(2) "North Slope natural gas pipeline" has the meaning given in 5
AS 42.06.630. 6
* Sec. 24. AS 42.05 is amended by adding new sections to read: 7
Sec. 42.05.435. Alaska liquefied natural gas project gas supply contracts. 8
(a) The commission may not approve a gas supply contract between a public utility 9
and an owner or operator of a gas pipeline advanced, operated, or owned, in whole or 10
in part, by the Alaska Gasline Development Corporation, or a subsidiary of the 11
corporation, that obligates the utility to pay more than $16 for each 1,000,000 British 12
thermal units of natural gas. 13
(b) Each year, after the effective date of this section, the commission shall 14
adjust the dollar amount in (a) of this section on January 1 of each year for inflation, 15
using 100 percent of the average of the annual change over the preceding five calendar 16
years in the Consumer Price Index for all urban consumers for urban Alaska, as 17
determined by the United States Department of Labor, Bureau of Labor Statistics. The 18
annual inflation adjustment under this subsection must increase the dollar amount in 19
(a) of this section by at least one percent and not more than three percent or by the 20
percentage increase set out in the terms of the gas supply contract, whichever is less. A 21
public utility may not increase the cost to a customer as a charge for inflation by more 22
than the amount of the inflation adjustment. 23
(c) In this section, "gas pipeline" has the meaning given in AS 31.25.390. 24
Sec. 42.05.438. Alaska liquefied natural gas project utility contract 25
requirements. (a) In addition to other approval requirements under this chapter, a 26
public utility must obtain the approval of the commission to recover costs related to a 27
contract with a duration of more than one year that reserves capacity in a gas pipeline 28
or liquefied natural gas plant. In this subsection, "contract" includes any agreement 29
that contains conditions that must be satisfied before the agreement becomes effective. 30
(b) The commission may not approve a gas supply contract for natural gas 31
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transported by a gas pipeline, or a contract that requires approval under (a) of this 1
section, that 2
(1) recovers costs from customers of a utility resulting from cost 3
overruns from construction of an Alaska liquefied natural gas project; or 4
(2) increases a commission-approved rate if throughput decreases. 5
(c) In this section, 6
(1) "Alaska liquefied natural gas project" has the meaning given in 7
AS 31.25.390; 8
(2) "cost overrun" means a cost in excess of the lowest firm dollar 9
amount demonstrated in an original cost estimate, relevant to an initial determination 10
of a final investment decision, as provided by the developer of an Alaska liquefied 11
natural gas project to a potential owner of or investor in the project for the purpose of 12
acquiring an interest in one or more components of the in-state phase of the project or 13
provided to a potential lending entity for the purpose of extending a loan to the 14
developer to own or construct phase one of the project; when a cost estimate under this 15
paragraph is determined separately for each component of the in-state phase of an 16
Alaska liquefied natural gas project, the relevant cost for review by the commission 17
shall be the sum of the respective two lowest firm dollar amounts demonstrated for 18
each component; 19
(3) "final investment decision" means a final affirmative decision of an 20
Alaska liquefied natural gas project developer or a subsidiary of the primary project 21
owner to proceed from the planning phase to the implementation and construction 22
phase of the applicable phase of the project; a final investment decision has not been 23
made until the project developer or a subsidiary of the primary project owner has 24
(A) obtained firm commitments for all debt and financing 25
required to construct the applicable phase of the project; 26
(B) entered into binding engineering, procurement, and 27
construction agreements for construction of the applicable phase of the project; 28
(C) entered into offtake agreements sufficient to underwrite 29
construction and operation of the applicable phase of the project; 30
(D) completed a cost estimate for the applicable phase of the 31
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project; 1
(E) completed a final resource report of the applicable phase of 2
the project; 3
(4) "gas pipeline" and "liquefied natural gas plant" mean a gas pipeline 4
or liquefied natural gas plant associated with an Alaska liquefied natural gas project; 5
"gas pipeline" does not include a spur line; 6
(5) "in-state phase" means the phase of the Alaska liquefied natural gas 7
project made up of the following components: 8
(A) a gas pipeline constructed to transport natural gas from the 9
North Slope to the Southcentral region of the state to service a regulated utility 10
serving the greater Anchorage area; and 11
(B) a gas treatment plant constructed or maintained to treat gas 12
supplied to a gas pipeline constructed under (A) of this paragraph. 13
(6) "spur line" 14
(A) means 15
(i) a natural gas transmission or lateral line that 16
branches from the main gas pipeline for the primary purpose of 17
delivering natural gas to a local community or utility distribution 18
system; and 19
(ii) compressing and metering equipment and 20
interconnection facilities related to the transmission or lateral line 21
described in (i) of this subparagraph; 22
(B) does not include infrastructure used for the export of 23
natural gas or lateral lines not necessary for delivering natural gas to a local 24
community or utility distribution system. 25
* Sec. 25. AS 43.20 is amended by adding a new section to read: 26
Sec. 43.20.019. Tax on income of certain oil and gas pass-through entities. 27
(a) Each taxable year, a tax is imposed on the entire taxable income derived from 28
sources in the state of every qualified entity. The tax is computed as follows: 29
If the taxable income is: Then the tax is: 30
Less than $1,000,000 zero 31
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$1,000,000 but less than $2,000,000 5 percent of the 1
taxable income over $1,000,000 2
$2,000,000 but less than $3,000,000 $50,000 plus 6 percent of the 3
taxable income over $2,000,000 4
$3,000,000 but less than $4,000,000 $110,000 plus 7 percent of the 5
taxable income over $3,000,000 6
$4,000,000 but less than $5,000,000 $180,000 plus 8 percent of the 7
taxable income over $4,000,000 8
$5,000,000 or more $260,000 plus 9.4 percent of the 9
taxable income over $5,000,000. 10
(b) For purposes of calculating taxable income under this section, 11
(1) taxable income of a qualified entity shall be apportioned to this 12
state in accordance with AS 43.19 (Multistate Tax Compact) as modified, where 13
applicable, by AS 43.20.141 - 43.20.146 as if the qualified entity were taxable as a C 14
corporation, as defined by 26 U.S.C. 1361(a)(2) (Internal Revenue Code), as that 15
section read on January 1, 2026; 16
(2) notwithstanding AS 43.20.021 and AS 43.20.036, a qualified entity 17
may not apply as a credit or deduction against tax liability a credit or deduction 18
allowed as to federal taxes under 26 U.S.C. (Internal Revenue Code), except that the 19
qualified entity may take a credit or deduction allowed for a C corporation under (1) of 20
this subsection. 21
(c) The tax under this section does not apply to a corporation subject to tax 22
under AS 43.20.011 or to an entity that is part of a unitary business with a corporation 23
subject to tax under AS 43.20.011. 24
(d) A public corporation is exempt from the tax under this section. If a 25
qualified entity is held in part by a public corporation, income in proportion to the 26
ownership interest held by the public corporation is exempt from the tax under this 27
section. The department may direct each owner of a qualified entity that is owned in 28
part by the Alaska Gasline Development Corporation (AS 31.25) to file a return with 29
the department. Notwithstanding AS 40.25.100(a) and AS 43.05.230(a), a return filed 30
by the Alaska Gasline Development Corporation under this subsection is a public 31
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record and is not confidential. 1
(e) For the purpose of determining the tax due under this section, the 2
department shall 3
(1) aggregate the taxable income of two or more entities if the 4
department determines that, without the provisions of this section, the taxable income 5
would reasonably be expected to be attributed to a single entity; 6
(2) except as provided in (c) of this section, include in the calculation 7
of taxable income of the qualified entity income that is attributable to an entity that is 8
part of a unitary business with the qualified entity paying tax under this section; and 9
(3) adopt regulations to prevent evasion of taxes imposed under this 10
section. 11
(f) For purposes of calculating income under this section, a qualified entity 12
may deduct from income a payment to the shareholder, owner, member, or partner of 13
the qualified entity, if 14
(1) the shareholder, owner, member, or partner is a taxpayer under this 15
chapter; 16
(2) the payment does not include a transfer of property; 17
(3) the payment is included in the shareholder's, owner's, member's, or 18
partner's income for purposes of this chapter; and 19
(4) the payment was not made with the specific intent to reduce or 20
evade the payment of tax under this chapter. 21
(g) In this section, 22
(1) "carbon capture" and "carbon storage" have the meanings given in 23
AS 43.55.165(e)(23); 24
(2) "pipeline" means a pipeline that transports oil or gas from north of 25
68 degrees North latitude to a location outside of the lease or property where the oil or 26
gas is produced for the direct purpose of sale and delivery of the oil or gas to a 27
commercial market; 28
(3) "qualified entity" 29
(A) means a sole proprietorship, partnership, limited liability 30
company, or entity that has elected to file federal returns under 26 U.S.C. 1361 31
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- 1379 (Internal Revenue Code) that 1
(i) has taxable income; 2
(ii) owns, operates, manages, or controls an entity that 3
has taxable income; 4
(iii) holds an ownership, investment, or similar interest 5
in an entity that has taxable income; or 6
(iv) owns an operating right, operating interest, or 7
working interest in a mineral interest of an entity with taxable income; 8
(B) does not include a natural person; 9
(4) "taxable income" means income 10
(A) from the production of oil or gas from a lease or property 11
in the state; 12
(B) from the transportation of oil or gas by pipeline in the state; 13
(C) from the supply of oil or gas for transportation by pipeline 14
in the state, whether directly, to an intermediary, or as an intermediary; 15
(D) from gas treatment, carbon capture, or carbon storage 16
activities in the state; 17
(E) from liquefied natural gas processing in the state; 18
(F) from the marine transportation of liquefied natural gas 19
produced in the state; and 20
(G) of an entity that is part of a unitary business with a carrier 21
or producer paying tax under this section as provided under (e)(2) of this 22
section. 23
* Sec. 26. AS 43.20.030(a) is amended to read: 24
(a) If a taxpayer [CORPORATION], or a partnership that has a taxpayer 25
[CORPORATION] as a partner, is required to make a return under the provisions of 26
the Internal Revenue Code, the taxpayer [IT] shall file with the department, within 30 27
days after the federal return is required to be filed, a return setting out 28
(1) the amount of tax due under this chapter, less credits claimed 29
against the tax; and 30
(2) other information for the purpose of carrying out the provisions of 31
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this chapter that the department requires. 1
* Sec. 27. AS 43.20.031(i) is amended to read: 2
(i) A taxpayer that [CORPORATION WHICH] is a member of a group of 3
unitary corporations or entities that [WHICH] collectively has income from business 4
activity taxable both inside and outside the state, or income from other sources both 5
inside and outside the state, shall determine its income from sources in this state by 6
use of the combined method of accounting. 7
* Sec. 28. AS 43.56.010(a) is amended to read: 8
(a) Except as provided in AS 43.59.010 and 43.59.020, an [AN] annual tax 9
of 20 mills is levied each tax year beginning January 1, 1974, on the full and true 10
value of taxable property taxable under this chapter. 11
* Sec. 29. AS 43.56.020(d) is amended to read: 12
(d) Taxable property subject to tax abatement under AS 43.59.010 or the 13
volumetric tax imposed under AS 43.59.020 [OF A NATURAL GAS PIPELINE 14
PROJECT OWNED OR FINANCED BY THE ALASKA GASLINE 15
DEVELOPMENT CORPORATION OR A JOINT VENTURE, PARTNERSHIP, OR 16
OTHER ENTITY THAT INCLUDES THE ALASKA GASLINE DEVELOPMENT 17
CORPORATION] is exempt from state taxes levied or authorized under 18
AS 43.56.010(a) and municipal taxes levied or authorized under AS 43.56.010(b) 19
[BEFORE THE COMMENCEMENT OF COMMERCIAL OPERATIONS OF THAT 20
NATURAL GAS PIPELINE PROJECT. IN THIS SUBSECTION, 21
"COMMENCEMENT OF COMMERCIAL OPERATIONS" MEANS THE FIRST 22
FLOW OF NATURAL GAS IN THE PROJECT THAT GENERATES REVENUE 23
TO THE OWNERS OF THE NATURAL GAS PIPELINE PROJECT]. 24
* Sec. 30. AS 43 is amended by adding a new chapter to read: 25
Chapter 59. Natural Gas Project Temporary Tax Abatement and Volumetric Tax. 26
Sec. 43.59.010. Temporary tax abatement. Property of a natural gas project 27
is not subject to the taxes levied under AS 29.45.080, AS 43.56.010, or AS 43.59.020 28
during the temporary tax abatement period. The abatement period begins on the 29
effective date of this section and ends on the earlier of 30
(1) the first day of a consecutive 30-day period in which the natural 31
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gas project achieves a throughput of 500,000,000 cubic feet of natural gas a day, 1
calculated as a rolling average over the 30-day period; or 2
(2) five years after the date of commencement of commercial 3
operations of phase one of the natural gas project. 4
Sec. 43.59.020. Imposition of alternative volumetric tax. (a) The owner of 5
property subject to tax under this section shall pay an alternative volumetric tax on the 6
throughput of the property. The alternative volumetric tax applies beginning on the 7
day after the expiration of the abatement period under AS 43.59.010. 8
(b) The volumetric tax is 9
(1) $0.062 for each 1,000 cubic feet of natural gas before 10
commencement of commercial operations of a liquefied natural gas plant related to the 11
natural gas project; 12
(2) $0.106 for each 1,000 cubic feet of natural gas on and after 13
commencement of commercial operations of a liquefied natural gas plant related to the 14
natural gas project; 15
(3) beginning 10 years after commencement of commercial operations 16
of a liquefied natural gas plant related to the natural gas project, in addition to the 17
amount collected under (2) of this subsection, an additional $0.106 for each 1,000 18
cubic feet of natural gas; 19
(4) beginning January 1, 2060, in addition to the amounts collected 20
under (2) and (3) of this subsection, an additional $0.212 for each 1,000 cubic feet of 21
natural gas. 22
(c) Beginning after the first year the tax applies to throughput of a natural gas 23
project under (b)(1) of this section, the tax rates under (b) of this section shall be 24
adjusted on January 1 of each year for inflation, using 100 percent of the average of 25
the annual change over the preceding five calendar years in the Consumer Price Index 26
for all urban consumers for urban Alaska, as determined by the United States 27
Department of Labor, Bureau of Labor Statistics. However, the annual adjustment 28
under this subsection must increase the rates by at least one percent and not more than 29
three percent. Each tax rate under (b) of this section shall be adjusted for inflation 30
under this subsection even if the tax rate does not yet apply. 31
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(d) An owner of property subject to tax under this section shall, on or before 1
the last day of each month, file a return with the department and with each 2
municipality collecting tax under this section. The return must state the throughput, in 3
cubic feet of natural gas for each day, of property subject to tax for the month 4
preceding the month in which the return is due and include an installment payment for 5
the month of the return. An installment payment is considered delinquent if the 6
payment is not received by the department on or before the last day of each month. 7
(e) The tax levied under this section is due annually, on the calendar year. The 8
owner of the property shall, on or before April 30 each year, pay any remaining tax 9
due under this section for tax accruing from throughput in the previous calendar year. 10
A tax payment under this subsection is considered delinquent if the payment is not 11
received by the department on or before April 30 each year. 12
(f) Notwithstanding AS 43.05.220, if a tax payment or installment payment 13
required under this section is delinquent, the department or a municipality shall assess 14
a penalty of 15 percent of the amount of delinquent taxes and interest on the 15
delinquent taxes, exclusive of penalty, at the rate specified in AS 43.05.225. 16
Sec. 43.59.030. Collection and allocation of alternative tax. (a) The 17
department shall levy and collect the alternative volumetric tax imposed by this 18
chapter that is allocated to the state. Unless otherwise elected by the municipality 19
under (h) of this section, a municipality that is not in the unorganized borough may 20
levy and collect the portion of the alternative volumetric tax imposed by this chapter 21
that is allocated to the municipality. The amount of tax allocated to each municipality 22
and to the state is determined under (b) - (f) of this section. 23
(b) Before commencement of commercial operations of a liquefied natural gas 24
plant related to a natural gas project, 25
(1) six percent of the tax under AS 43.59.020(b)(1) is allocated to the 26
North Slope Borough; 27
(2) 47 percent of the tax under AS 43.59.020(b)(1) is allocated to the 28
areas of the state through which a gas pipeline runs; and 29
(3) 47 percent of the tax under AS 43.59.020(b)(1) is allocated to the 30
state for community assistance payments. 31
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(c) On and after the commencement of commercial operations of a liquefied 1
natural gas plant related to a natural gas project, 2
(1) 48.4 percent of the tax under AS 43.59.020(b)(2) is allocated to the 3
Kenai Peninsula Borough; 4
(2) 27 percent of the tax under AS 43.59.020(b)(2) is allocated to the 5
North Slope Borough; 6
(3) 5.6 percent of the tax under AS 43.59.020(b)(2) is allocated to the 7
state; 8
(4) 9.5 percent of the tax under AS 43.59.020(b)(2) is allocated to the 9
areas of the state through which a gas pipeline runs; 10
(5) 9.5 percent of the tax under AS 43.59.020(b)(2) is allocated to the 11
state for community assistance payments; 12
(6) 100 percent of the tax under AS 43.59.020(b)(3) is allocated to the 13
state for community assistance payments; and 14
(7) 100 percent of the tax under AS 43.59.020(b)(4) is allocated to the 15
state. 16
(d) For purposes of (b)(2) and (c)(4) of this section, the portion allocated to 17
the state is equal to the proportion of the gas pipeline in the unorganized borough, and 18
the portion allocated to each municipality that is not in the unorganized borough is 19
equal to the proportion of the gas pipeline in the municipality. To determine the 20
proportional distribution under this subsection, the length of pipeline in the 21
unorganized borough or a municipality that is not in the unorganized borough is 22
divided by the total length of the pipeline. 23
(e) Each year, the legislature may appropriate the amount allocated to the state 24
under (b)(3), (c)(5), and (c)(6) of this section to the municipalities, communities, and 25
reserves in the unorganized borough, distributed as community assistance payments in 26
accordance with AS 29.60.855 and 29.60.860. 27
(f) The amount of tax allocated to the state under (c)(3) and (7) of this section 28
shall be deposited into the general fund. 29
(g) Each month, the department shall report to a municipality collecting tax 30
under this section the amount of tax allocated to the municipality for the preceding 31
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month. 1
(h) A municipality may by ordinance elect for the department to collect, on 2
behalf of the municipality, the portion of the tax levied under this chapter that is 3
allocated to the municipality. 4
Sec. 43.59.040. Administrative appeals; distraint of property. (a) A 5
decision by the department regarding the imposition or calculation of the tax levied 6
under AS 43.59.020 may be appealed to the department for an informal conference 7
under AS 43.05.240, and a final decision may be appealed to the office of 8
administrative hearings under AS 43.05.405. 9
(b) The remedy of distraint of property set out in AS 43.20.270 applies to the 10
tax levied in this chapter. However, only the property subject to tax under 11
AS 43.59.020 may be distrained. 12
Sec. 43.59.050. Termination of status; application. (a) The tax abatement 13
under AS 43.59.010 and the alternative volumetric tax under AS 43.59.020 do not 14
apply to a natural gas project if, by 15
(1) January 1, 2028, a final investment decision has not been made on 16
phase one of the natural gas project; 17
(2) December 31, 2032, construction of a gas pipeline associated with 18
phase one of the natural gas project has not been completed; 19
(3) January 1, 2037, at least one major component of the natural gas 20
project has not been completed and commencement of commercial operations of that 21
component has not occurred. 22
(b) The commissioner may reasonably extend a date set out under (a) of this 23
section in the event of force majeure. 24
(c) If, under (a) of this section, neither the tax abatement under AS 43.59.010 25
nor the alternative volumetric tax under AS 43.59.020 applies to property of a natural 26
gas project, the property is subject to all other state and municipal taxes on taxable 27
property, including taxes levied under AS 29.45.080 and AS 43.56.010. 28
(d) In this section, 29
(1) "commencement of construction" means the 30
(A) laying and welding together in an excavated trench 31
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multiple sections of steel pipe that are intended for use as part of the gas 1
pipeline; and 2
(B) establishment of at least one work camp along the gas 3
pipeline route that is intended to provide crew quarters and services during 4
construction of the gas pipeline; 5
(2) "final investment decision" means a final affirmative decision of a 6
natural gas project developer or a subsidiary of the primary project owner to proceed 7
from the planning phase to the implementation and construction phase of phase one of 8
the natural gas project; a final investment decision has not been made until the project 9
developer or a subsidiary of the primary project owner has 10
(A) obtained firm commitments for all debt and financing 11
required to construct phase one of the project; 12
(B) entered into binding engineering, procurement, and 13
construction agreements for construction of phase one of the project; 14
(C) entered into offtake agreements sufficient to underwrite 15
construction and operation of phase one of the project; 16
(D) completed a cost estimate for phase one of the project; 17
(E) completed a final resource report of phase one of the 18
project. 19
Sec. 43.59.060. Reporting; regulations. (a) The owner of property subject to 20
tax under this chapter shall, at the request of the department, provide to the department 21
the information necessary to calculate the tax under this chapter. Notwithstanding 22
AS 40.25.100(a) and AS 43.05.230, the department shall hold confidential proprietary 23
information provided to the department under this subsection at the request of the 24
owner. In this subsection, "proprietary information" means information that, if 25
publicly disclosed, would adversely affect the competitive position of the owner or 26
materially diminish the commercial value of the information to the owner. 27
(b) The department shall adopt regulations under AS 44.62 (Administrative 28
Procedure Act) to implement this chapter, including procedures for 29
(1) measuring throughput; 30
(2) throughput reporting; 31
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(3) calculating the rolling average of throughput; and 1
(4) allocating the tax levied under this chapter to the state and 2
municipalities under AS 43.59.030. 3
Sec. 43.59.100. Definitions. In this chapter, 4
(1) "commencement of commercial operations" means the first flow of 5
natural gas through a natural gas project or a component of a natural gas project, as 6
applicable, that treats, transports, or processes a commercial amount of natural gas; 7
(2) "gas pipeline" 8
(A) means a main natural gas pipeline from the outlet flange of 9
the gas treatment plant on the North Slope to 10
(i) for purposes of phase one of the project, the inlet 11
flange of infrastructure providing natural gas to the Southcentral region 12
of the state; 13
(ii) for purposes of phase two of the project, the inlet 14
flange of the liquefied natural gas plant located in the Kenai Peninsula 15
region of the state; 16
(B) does not include any gas lines downstream of any offtake 17
point between a gas treatment plant and a liquefied natural gas plant; 18
(3) "gas treatment plant" means a facility and the related activities 19
required to receive natural gas from a Prudhoe Bay unit gas transmission line, a Point 20
Thomson unit gas transmission line, or other facilities, to treat the natural gas to 21
pipeline specifications, to dispose of or deliver byproducts, to deliver liquid products 22
for further transportation, and to deliver treated natural gas for transportation through a 23
gas pipeline; 24
(4) "liquefied natural gas plant" means a facility for liquefying natural 25
gas and includes structures, equipment, underlying land rights, and other associated 26
systems, storage, and facilities for off-loading liquefied natural gas; 27
(5) "natural gas project" and "project" means a natural gas project that 28
includes, collectively, a Prudhoe Bay unit gas transmission line, a Point Thomson unit 29
gas transmission line, a gas pipeline, a gas treatment plant, a liquefied natural gas 30
plant, and a marine terminal; in this paragraph, 31
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(A) "marine terminal" means a terminal and those facilities 1
required to receive liquefied natural gas from the boundary of the liquefied 2
natural gas plant for marine transportation, including auxiliary vessels used in 3
the operation of the terminal; 4
(B) "Point Thomson unit gas transmission line" means a natural 5
gas transmission line from the outlet flange of the Point Thomson unit 6
production facility to the inlet flange of the gas treatment plant; and 7
(C) "Prudhoe Bay unit gas transmission line" means a natural 8
gas transmission line from the outlet flange of the Prudhoe Bay unit central gas 9
facility to the inlet flange of the gas treatment plant; 10
(6) "phase one" means a phase of a natural gas project that includes a 11
gas pipeline and other related infrastructure required for the transportation of natural 12
gas from the North Slope to the Southcentral region of the state; 13
(7) "phase two" means a phase of a natural gas project that includes a 14
gas treatment plant, a marine terminal, a liquefied natural gas plant, and other related 15
infrastructure required for the export of natural gas; 16
(8) "throughput" 17
(A) means 18
(i) the volume of natural gas measured by summing all 19
volumes sold or otherwise delivered at each outlet or offtake point 20
along the gas pipeline; and 21
(ii) natural gas consumed as fuel for the operation of a 22
liquefaction facility; 23
(B) does not include natural gas consumed as fuel for pipeline 24
compression. 25
* Sec. 31. AS 44.33 is amended by adding a new section to read: 26
Article 13A. Natural Gas Project Municipal Impact Grant Fund. 27
Sec. 44.33.850. Natural gas project municipal impact grant fund. (a) The 28
natural gas project municipal impact grant fund is established in the department. The 29
fund consists of money received by the state from a project developer of an Alaska 30
liquefied natural gas project and appropriated to the fund by the legislature. 31
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(b) The department shall use the money appropriated to the fund to timely 1
distribute grants to impacted municipalities for activities, services, or facilities that 2
offset verified actual or reasonably expected effects of construction of a gas pipeline. 3
When administering grants under this subsection, the department shall prioritize grant 4
awards based on the needs of the impacted municipality, the severity of the effects 5
caused by construction of the pipeline, and the correlation of the effect to the 6
construction of the pipeline. The department shall adopt regulations governing the 7
distribution of grants under this subsection. 8
(c) In this section, 9
(1) "department" means the Department of Commerce, Community, 10
and Economic Development; 11
(2) "fund" means the natural gas project municipal impact grant fund 12
established in (a) of this section; 13
(3) "gas pipeline" has the meaning given in AS 31.25.390; 14
(4) "impacted municipality" means the North Slope Borough, 15
Fairbanks North Star Borough, Denali Borough, Municipality of Anchorage, 16
Matanuska-Susitna Borough, and Kenai Peninsula Borough; 17
(5) "project developer" means an entity responsible for coordinating 18
the financing and construction of a natural gas project. 19
* Sec. 32. AS 31.25.100 and 31.25.110 are repealed. 20
* Sec. 33. The uncodified law of the State of Alaska is amended by adding a new section to 21
read: 22
REQUIRED REPORT: PHASE TWO OF THE ALASKA LIQUEFIED NATURAL 23
GAS PROJECT. (a) Before a final investment decision is made on phase two of the Alaska 24
liquefied natural gas project, the Alaska Gasline Development Corporation shall deliver a 25
report to the senate secretary and the chief clerk of the house of representatives and shall 26
notify the legislature that the report is available. The report must include 27
(1) a discussion and review of the effects and effectiveness of this Act on the 28
Alaska liquefied natural gas project; 29
(2) if applicable, suggestions for additional changes to law related to the 30
Alaska liquefied natural gas project, before implementation of phase two. 31
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(b) In this section, 1
(1) "Alaska liquefied natural gas project" has the meaning given in 2
AS 31.25.390; 3
(2) "final investment decision" means a final affirmative decision of a natural 4
gas project developer or a subsidiary of the primary project owner to proceed from the 5
planning phase to the implementation and construction phase of phase two of the Alaska 6
liquefied natural gas project; a final investment decision has not been made until the project 7
developer or a subsidiary of the primary project owner has 8
(A) obtained firm commitments for all debt and financing required to 9
construct phase two of the project; 10
(B) entered into binding engineering, procurement, and construction 11
agreements for construction of phase two of the project; 12
(C) entered into offtake agreements sufficient to underwrite 13
construction and operation of phase two of the project; 14
(D) completed a cost estimate for phase two of the project; 15
(E) completed a final resource report of phase two of the project; 16
(3) "phase two" means a phase of the Alaska liquefied natural gas project that 17
includes a gas treatment plant, a marine terminal, a liquefied natural gas plant, as defined in 18
AS 31.25.390, and other related infrastructure required for the export of liquefied natural gas. 19
* Sec. 34. The uncodified law of the State of Alaska is amended by adding a new section to 20
read: 21
APPLICABILITY: ALASKA GASLINE DEVELOPMENT CORPORATION 22
CONFIDENTIALITY AGREEMENTS, SUBSIDIARIES, NOTIFICATIONS, LEGAL 23
RELATIONSHIPS. (a) AS 31.25.080(a)(1) and (6), as amended by sec. 9 of this Act, apply to 24
a transfer or disposition occurring on or after the effective date of sec. 9 of this Act. 25
(b) AS 31.25.090(j) and (k), added by sec. 12 of this Act, apply to a confidentiality 26
agreement entered into on or after the effective date of sec. 12 of this Act. 27
(c) AS 31.25.145(a), added by sec. 18 of this Act, applies to revenue generated on and 28
after the effective date of sec. 18 of this Act. 29
(d) AS 31.25.280, added by sec. 21 of this Act, applies to a legal relationship with a 30
foreign entity entered into on or after the effective date of sec. 21 of this Act. In this 31
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subsection, "legal relationship" has the meaning given in AS 31.25.280(c), added by sec. 21 1
of this Act. 2
(e) AS 31.25.285, added by sec. 20 of this Act, applies to a legal relationship entered 3
into on or after the effective date of sec. 20 of this Act. In this subsection, "legal relationship" 4
has the meaning given in AS 31.25.285(b), added by sec. 20 of this Act. 5
* Sec. 35. The uncodified law of the State of Alaska is amended by adding a new section to 6
read: 7
APPLICABILITY: OIL AND GAS ENTITY TAX. The tax established under 8
AS 43.20.019, added by sec. 2 5 of this Act, applies to a qualified entity for a tax year 9
beginning on or after January 1, 2028. In this section, "qualified entity" has the meaning given 10
in AS 43.20.019(g), added by sec. 25 of this Act. 11
* Sec. 36. The uncodified law of the State of Alaska is amended by adding a new section to 12
read: 13
TRANSITION: EXISTING OPTIONS. (a) Within 30 days after the effective date of 14
sec. 15 of this Act, the Alaska Gasline Development Corporation shall notify the president of 15
the senate, the speaker of the house of representatives, and the chairs of the finance committee 16
of each house of the legislature of any existing options to invest in a revenue-generating 17
project, as required under AS 31.25.125, added by sec. 15 of this Act. 18
(b) An option for state participation in a revenue-generating project negotiated by the 19
Alaska Gasline Development Corporation agreed to before the effective date of sec. 15 of this 20
Act must allow the state to exercise the option for at least 180 days after the corporation 21
notifies the legislature under AS 31.25.125, added by sec. 15 of this Act. 22
* Sec. 37. The uncodified law of the State of Alaska is amended by adding a new section to 23
read: 24
CONDITIONAL EFFECT: BILL; NOTIFICATION TO THE REVISOR OF 25
STATUTES. (a) Sections 1, 2, 4 - 6 and 28 - 30 of this Act take effect only if, before 26
January 1, 2032, the commissioner of revenue determines that 27
(1) the project developer of a natural gas project has paid the state 28
$40,000,000 within 60 days after a final investment decision is made on phase one of the 29
natural gas project and contractually agrees to pay an additional $40,000,000 to the state 30
within 60 days after a final investment decision is made on phase two of the natural gas 31
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project; the legislature may appropriate amounts required to be paid under this section to the 1
natural gas project municipal impact grant fund, established in AS 44.33.850, added by sec. 2
31 of this Act; neither the state nor a corporation of the state may be responsible for the 3
payment or a portion of the payment required by this paragraph; 4
(2) the primary owner of property that could be taxable under AS 43.59.020, 5
added by sec. 30 of this Act, has entered into a project labor agreement covering work in the 6
state on all phases of construction of the gas pipeline, camp facilities, Alaska liquefied natural 7
gas import or export facilities, carbon capture facilities, compressor, metering, or heater 8
facilities, gas treatment plants, and infrastructure related to those projects; in this paragraph, 9
"project labor agreement" means a comprehensive collective bargaining agreement between 10
the owner and the appropriate labor organizations to promote economy and efficiency and to 11
ensure expedited construction with labor stability by employing qualified residents of the 12
state; 13
(3) the construction of the gas pipeline, camp facilities, Alaska liquefied 14
natural gas import or export facilities, carbon capture facilities, compressor, metering, or 15
heater facilities, gas treatment plants, and infrastructure related to those projects, including all 16
fabrication in the state, will be performed by employees of contractors or subcontractors who 17
receive the current prevailing rate of wages specified in the latest determination of prevailing 18
rate of wages for public construction projects issued by the Department of Labor and 19
Workforce Development under AS 36.05.010; 20
(4) not less than 15 percent of the total hours worked in the state on the gas 21
pipeline, camp facilities, Alaska liquefied natural gas import or export facilities, carbon 22
capture facilities, compressor, metering, or heater facilities, gas treatment plants, and 23
infrastructure related to those projects will be performed by apprentices from federally 24
registered apprenticeship programs; and 25
(5) the project developer of a natural gas project who would be responsible for 26
constructing a spur line has committed to construct the spur line that serves the City of 27
Fairbanks and the Fairbanks North Star Borough; to meet the requirement of this paragraph, 28
(A) the project developer shall commit to, on or before completion of 29
phase one of the project, timely and in good faith begin all necessary permit 30
applications and take action on any other regulatory requirements necessary for the 31
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construction of the spur line, including, if the Regulatory Commission of Alaska has 1
jurisdiction over the tariffs, 2
(i) initiating a tariff proceeding; and 3
(ii) filing with the commission for systemwide tariff treatment 4
for the spur line with an economically viable gas sales contract; 5
(B) the project developer shall commit to begin construction on a spur 6
line within one year after receiving all permits and meeting the necessary regulatory 7
requirements described in (A) of this paragraph; and 8
(C) the spur line must 9
(i) have sufficient capacity to serve reasonably projected 10
residential, commercial, and industrial demand in the Interior area of the state; 11
(ii) be scheduled to begin operations within two years after the 12
commencement of commercial operations of a major component of the natural 13
gas project; 14
(iii) be designed to connect with local distribution 15
infrastructure capable of delivering natural gas to the City of Fairbanks and the 16
surrounding urban area; 17
(iv) be designed and operated to deliver gas at the lowest 18
reasonable cost consistent with safe and reliable service; and 19
(v) allocate costs, including capital, financing, and construction 20
costs, justly, reasonably, and not unduly discriminatorily, across all consumers 21
systemwide, including consumers in the area from the North Slope to the 22
Southcentral regions of the state and, to the extent allowed under federal law, 23
export consumers; costs related to financing or construction of the spur line 24
may not be allocated solely to the Interior area of the state. 25
(b) If the commissioner of revenue determines that the conditions in (a) of this section 26
have been met, the commissioner of revenue shall notify the revisor of statutes in writing 27
within 30 days after making the determination. 28
(c) In this section, 29
(1) "economically viable gas sales contract" means a contract, precedent 30
agreement, memorandum of understanding, tariff-supported sales arrangement, or other 31
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commercially reasonable arrangement for the sale, delivery, transportation, or distribution of 1
natural gas to serve current or reasonably projected residential, commercial, institutional, 2
utility, or industrial demand in the City of Fairbanks, the Fairbanks North Star Borough, or 3
the surrounding Interior area of the state, including demand aggregated by a public utility, gas 4
distribution utility, local government, state agency, or other entity serving customers in the 5
Interior area of the state; the gas sales contract need not demonstrate that the spur line alone 6
will recover all capital, financing, construction, operation, or maintenance costs solely from 7
customers in the Interior area of the state; 8
(2) "final investment decision" means a final affirmative decision of a natural 9
gas project developer or a subsidiary of the primary project owner to proceed from the 10
planning phase to the implementation and construction phase of the applicable phase of the 11
natural gas project; a final investment decision has not been made until the project developer 12
or a subsidiary of the primary project owner has 13
(A) obtained firm commitments for all debt and financing required to 14
construct the applicable phase of the project; 15
(B) entered into binding engineering, procurement, and construction 16
agreements for construction of the applicable phase of the project; 17
(C) entered into offtake agreements sufficient to underwrite 18
construction and operation of the applicable phase of the project; 19
(D) completed a cost estimate for the applicable phase of the project; 20
(E) completed a final resource report of the applicable phase of the 21
project; 22
(3) "gas pipeline" means a gas pipeline, as defined in AS 31.25.390, that is 23
expected to be subject to the alternative volumetric tax under AS 43.59.020, added by sec. 30 24
of this Act; 25
(4) "phase one" means a phase of a natural gas project that includes a gas 26
pipeline and other related infrastructure required for the transportation of natural gas from the 27
North Slope to the Southcentral region of the state; 28
(5) "phase two" means a phase of a natural gas project that includes a gas 29
treatment plant, a marine terminal, a liquefied natural gas plant, and other related 30
infrastructure required for the export of natural gas; 31
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(6) "spur line" 1
(A) means 2
(i) a natural gas transmission or lateral line that branches from 3
the main gas pipeline for the primary purpose of delivering natural gas to the 4
City of Fairbanks and the Fairbanks North Star Borough; and 5
(ii) compressing and metering equipment and interconnection 6
facilities related to the transmission or lateral line described in (i) of this 7
subparagraph; 8
(B) does not include infrastructure used for the export of natural gas or 9
lateral lines not necessary for delivering natural gas to a local community or utility 10
distribution system; 11
(7) "systemwide" means the area from the North Slope to the Southcentral 12
regions of the state. 13
* Sec. 38. The uncodified law of the State of Alaska is amended by adding a new section to 14
read: 15
CONDITIONAL EFFECT: EDUCATION FUNDING. Section 3 of this Act takes 16
effect only if sec. 2 of this Act takes effect. 17
* Sec. 39. If, under sec. 37(a) of this Act, secs. 1, 2, 4 - 6 and 28 - 30 of this Act take effect, 18
they take effect on the day after the date the commissioner of revenue determines that the 19
conditions in sec. 37(a) of this Act have been met. 20
* Sec. 40. Sections 25 - 27 and 35 of this Act take effect January 1, 2028. 21
* Sec. 41. If, under sec. 38 of this Act, sec. 3 of this Act takes effect, it takes effect five 22
years after a final investment decision is made on phase two of the natural gas project. In this 23
section, 24
(1) "final investment decision” has the meaning given in AS 31.25.270; 25
(2) "phase two" has the meaning given in AS 43.59.100; 26
(3) "natural gas project" has the meaning given in AS 43.59.100. 27
* Sec. 42. Except as provided in secs. 39 and 4 1 of this Act, this Act takes effect 28
immediately under AS 01.10.070(c). 29